Genius Sports Ltd

NYSE:GENI

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, thank you for standing by today's conference call. We'll begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the Genius Sports First Quarter 2024 Earnings Results. All lines have been placed on mute to prevent any background noise. [Operator Instructions] I would now like to turn the conference over to the company. You may begin.

[Brandon Bukstel, executive]

Thank you, and good morning. Before we begin, we'd like to remind you that certain statements made during this call may constitute forward-looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our annual report on Form 20-F filed with the SEC on March 15th, 2024. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius' operating performance. These measures should not be considered in isolation or as a substitute for Genius' financial results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures is available in our earnings press release and earnings presentation, which can be found on our website at investors.geniussports.com. With that, I'll now turn the call over to our CEO, Mark Locke.

[Mark Locke, executive]

Hello. Good morning, and thank you for joining us today as we begin another year on a positive note with strong momentum across the business. Before we dive into the results, we'd like to begin by thanking our partners at APAC for their support and investment over the last 6 years. You may have seen last month that APAC reduced their holdings in Genius to a level where they now have stepped down from our Board of Directors. The Board representatives from APAC have provided valuable insight and expertise as we went through a period of transformative growth, expanding from $88 million of revenue in 2018 to $0.5 billion forecasted in 2024. We have spent the last 3 years as a public company working very hard to cultivate a great group of public equity investors who we are proud to call shareholders in Genius Sports, and we look forward to working with them and many others over the years ahead. And with that, we are very happy to report our ninth consecutive quarter of outperformance relative to our guidance, once again demonstrating our consistent and predictable business model and strong execution. In the first quarter, we grew revenue by 23% year-on-year to $120 million, beating our guidance of $117 million. Our group adjusted EBITDA was $7 million in the quarter, also exceeding our guidance of $6 million. We remain focused on consistently outperforming financial targets whilst delivering on our core strategic objective of becoming the must-have digital partner for leagues, sports content distributors, sportsbooks, and brands. The first quarter was an excellent example to highlight each of these areas as we continue our wide-scale distribution of technology and value-enhancing products across the sports ecosystem. This is exactly how we have retained key league partnerships over the years and positioned our commercial model for sustainable growth in profitability and cash flow. Our strong start to the year makes us even more confident in our outlook. So we're raising our 2024 group revenue and adjusted EBITDA guidance to $500 million and $82 million, respectively, up from $480 million and $75 million to begin the year. This implies year-on-year group revenue and adjusted EBITDA growth of 21% and 54%, respectively, and raises our group adjusted EBITDA margin to 16.4%, representing 350 basis points of improvement. We are also reaffirming our cash flow positivity for the full year, which will continue to strengthen into 2025. As we reach this important annualized milestone, we may be more proactive in deploying capital across a range of potential initiatives, such as M&A, share repurchase or otherwise. Therefore, we want to position ourselves for any opportunity that may arise in the future as we continue to mature as a public company. As such, we are carrying out a few steps to optimize our overall financial flexibility with relatively low-cost capital. Firstly, we have closed a $90 million revolving credit agreement with Citibank and Deutsche Bank, which, combined with our cash on balance sheet gives us greater flexibility to access additional capital level be necessary. Second, as a matter of general corporate housekeeping, Genius Sports is now Wix eligible following our 3-year anniversary listing. Therefore, in accordance with cost remarket practice, we intend to file an S-3 shelf registration statement this week. Our intention with this filing is simply to follow ordinary best practice in the SEC housekeeping now that Genius is Wix shelf eligible. We are taking these steps towards greater financial flexibility because we want to be nimble when the potential opportunities arise in the near to medium term, particularly as our business fundamentals continue to improve, and we gained further clarity on our long-term growth and profitability prospects. Our confidence in the underlying business fundamentals is reinforced, not just by our financial results, but from the successful execution of our core strategic objectives, for example. We continue to reach wide-scale distribution of our computer vision and AI technology with leagues and federations around the globe. The broader our reach, the more we establish Genius Sports technology as the standard for next-gen data collection. The foundation with leagues across the globe is strong and continuing to expand, and we've successfully launched several new betting and media products on that basis. Most notably, in the last few months, we struck long-term technology partnerships with the likes of fever, Lithuanian Basketball League and the WNBA, which is the first women's professional sports league in the U.S. to utilize league-wide optical tracking. We also deployed optical tracking technology for the NCAA women's final 4 last month, further empowering the explosive growth in women's sports. Each new deal marks an important proof point for how leagues are increasingly focusing on capturing rich data and enabling new forms of analytical insights for broadcasters, media outlets and fans, all built on a Genius Sports technology. This then becomes the foundation on which we are launching new products, such as bet vision and real-time broadcast augmentation solutions, which are being monetized today. One really exciting example of how we've taken this as a step forward is our new partnership with Premier League team, Brentford Football Club and one of its sponsors, GTECH to power augmented highlights to fan in stadia and on social media. We have now combined our player tracking and broadcast augmentation tools with our advertising technology to create entirely new sponsorship inventory for Brentford Stadium's naming partner. Now an interesting data point like ShopSpeed becomes a new sponsble asset for Brentford and for GTECH, it represents an opportunity to associate their brand with the most engaging moments of the match, shots on goal. Our ability to automatically capture this data through computer vision and AI and to transform it into a creative graphical overlay, all in real time is completely unique to Genius Sports technology, creating another level of connectivity for leagues, sponsors and fans. In summary, the greater our distribution, the more product we can monetize at scale and the more integral we become to the leagues themselves. This is how we have successfully retained key lead partners like the NFL and English Premier League over time. Technology is increasingly front and center in our lead relationships, and this is the type of differentiated value that we provide. For instance, last summer, we extended our 2 most important data rights agreements, the NFL and Football DataCo, which governs all of U.K. football, including the English Premier League. In March, we also announced that we're now in exclusive discussions to extend our football DataCo agreement through the 28/29 season. While this agreement is still under final negotiations, we are delighted that they have chosen to work with us for another 4 years. Given the massive importance of U.K. football on a global basis, this relationship has materially improved our commercial offering in the global sports betting market over the years. Looking ahead, we expect that this will continue to be a key pillar of our growth strategy through the end of the decade. While we obviously cannot disclose specific terms of the deal, we want to address head on what we expect from our business over the length of this relationship. Like what we have proven with our NFL partnership, a strong and long-term relationship with FDC will enable us to continue expanding margins and increasing cash flows with the trajectory that we had always envisaged. We are now more confident than ever in our ability to sustain strong revenue growth for this foreseeable future. And don't envisage this growth slowing in the near term given the positive structural tailwinds and the momentum in our business. In fact, now having our 2 largest data rights deals secured for the next 4 or 5 years gives us an even greater visibility of our cost base and a higher degree of confidence in the trajectory and the pace at which we reach our long-term EBITDA margin target of at least 30%, ultimately converting to increased cash flow. The increased guidance we announced for the remainder of 2024 should be indicative of our momentum into 2025. Not to mention, this also affords us 4 to 5 years more to become even more deeply integrated with the digital infrastructure of the leagues. This enables more ways for leagues to access next-gen data and apply it in many different ways, spinning broadcast, fan engagement, advertising, sponsor activation, and sports betting. Ultimately, the access to this data enables us to continue fueling growth in our core business model. These rights agreements gives us access not just to live data feeds to power sports betting markets, but to the broader sports ecosystem where we can leverage data and technology to activate audiences with data-driven content, marketing services and immersive viewing experiences. Year after year, we are proving how our commercial model is built to benefit from the multiple tailwinds that exist in the world of sports. Whether it's growth in the online sports betting market, growth in its in-play betting, growth in sports digital advertising spend, and increased engagement in sports as a whole, we are poised to benefit in many different ways. This is how we've been able to achieve our strong results over the years. I'll now turn the call to Nick to discuss the Q1 results in more detail.

[Nicholas Taylor, executive]

Thank you, Mark. We are very happy to report another quarter of outperformance relative to our expectations. Each quarter, we discussed the many ways in which we can outperform, whether that's from a growing sports betting town, higher in-play betting, improving win margins, cross-sell of additional products and content or higher demand for digital advertising services. This quarter, our outperformance was primarily driven by our media business, which increased by 63% year-on-year, marking a significant reacceleration of growth and our strongest quarter in nearly 2 years. This was driven by meaningful spend from major U.S. sportsbook operators around the key sporting events, namely the NFL Playoffs, the Super Bowl and March Madness as well as the launch of online sports betting in North Carolina in the quarter. And as you've just seen on Slide 8, we are executing digital advertising campaigns for many nonbetting brands around these key sporting events as well, ranging anywhere from prudent beverage brands to individual leagues and teams themselves. Betting revenue also increased year-on-year by 14%, largely driven by strong revenue share performance in the U.S., albeit a relatively small contributor to overall betting revenue in the quarter. We also reported group adjusted EBITDA of approximately $7 million, slightly ahead of our $6 million guide. As it relates to our adjusted EBITDA this quarter, there are 2 points worth noting. First, as I mentioned last quarter, we expanded our NFL partnership last summer to include domestic streaming rights, which powers our bet vision project for Sportsbook and was entirely new in the 2023, 2024 NFL season. These rights were expensed equally in each month during the season, including January and February. As a result, this has an outsized effect on our Q1 2024 profitability simply because there were fewer NFL games to generate revenue despite this new set of rights being accretive over the course of the full season. Second, our adjusted EBITDA is largely a function of the mix between betting and media revenue with betting outperformance typically contributing to profitability to higher incremental margins. Media significantly outperformed in Q1, and therefore, the incremental flow-through of this outperformance was approximately 32%. Turning to cash. We finished the quarter with $93 million on the balance sheet, roughly in line with where we expected to finish the quarter, and we are confidently reaffirming our expectation to be cash flow positive in H2 and for the full year 2024. To conclude, our results from the quarter and our increased revenue and EBITDA guidance to $500 million and $82 million, respectively, sets us on a steady path to our long-term adjusted EBITDA target of 30% plus, and we are more confident than ever about our trajectory. We continue to execute on our core strategic objectives. And as a result, we're working to extend our relationship with arguably the most important sports assets globally. Therefore, we are feeling very optimistic about 2025 as well. And while we are not issuing formal guidance just yet, we believe our increase in 2024 guidance to be broadly representative of our structural momentum into 2025 as we expect continued revenue growth, margin expansion and increasing cash flow. With this strong momentum and additional financial flexibility, we have a heightened center excise across the business, and we look forward to sharing future updates. With that, we now conclude our prepared remarks and open the line to Q&A.

[Operator]

[Operator Instructions] And your first question comes from the line of Jed Kelly with Openheimer.

[Jed Kelly, analyst]

Just 2, if I may. Just on the increase in the back half guidance, is that implying confidence around some of the contract renewals coming up or more momentum in the betting tech services or in the media, tech and content services. And then Mark, I appreciate the opening comments on potentially raising capital. Where do you actually see the most opportunity in your technology portfolio? Or where is the most opportunity for growth that you would potentially do an acquisition?

[Mark Locke, executive]

On your first question, the increase in the back half, what we're seeing in the business at the moment, we've got an awful lot of momentum. Things are going extremely well. We're not really focusing too much on contract renewals as part of it. This is about general momentum in the business, and it's not really stuff that we're taking into account the back half. In terms of capital, look, business, as I said, it's in a strong place, and I think businesses that are performing well. We want to have optionality and firepower, which is why we've progressed with the revolver. The 2 main areas that we see potential is really M&A and potentially share buybacks in the future. But we're taking this one step at a time.

[Operator]

Your next question comes from the line of Bernie McTernan with Needham.

[Bernard McTernan, analyst]

Just wanted to talk about the data rights and get a sense maybe to start, how competitive it was to get the exclusive negotiating rights for a Football DataCo and then, Mark, just given your comments on long-term profitability and getting to 30% plus EBITDA margins. Just any insights into the rights costs and commentary on the impact on cash and profitability. Basically, I want to ask if these contracts generally have large year 1 step-ups? And should we expect EBITDA to be going backwards for a given year if those step-ups occur, if they do happen?

[Mark Locke, executive]

Look, we said along that we're really in a strong position with Aston that's been proven on the basis we've won it and we're absolutely delighted. We're very, very happy with the deal that we've done. So we're feeling good about the impact on the business. One thing that is becoming clear as we listen to the market and talk to people is that people, I guess, don't totally appreciate that the deal and the relationship we have with DataCo is a lot broader than just the data rights relationship. We're a technology-led business. We've said all along that technology deployment and the use of that technology strengthens our position in the market. And that has become a really key part of these negotiations. And again, we're feeling really good about that technology deployment and a lot of the opportunity and a lot of the partnership led new drivers that are coming from that.

[Nicholas Taylor, executive]

I'll just pick up that second part, I think. I think we said in the prepared remarks, Bernie, that we've seen very optimistic, not just about '24, but actually about '25 and '26. And the great thing about the FTC deal, although albeit it's obviously for negotiations, I can't comment specifically on those terms, is it gives us really strong visibility now all the way out to 2029, 2030 on our major rights deals. And as I said in the prepared remarks, is what we've done in 2022 to 2024, we expect it to continue through '25 and '26, which is continued double-digit revenue growth, continued margin expansion and continued increased cash flow throughout the this year but in the following years as well.

[Mark Locke, executive]

One other thing is worth adding is that when we did the NFL deal, we were pretty clear about the opportunities that the NFL gave to us all those years ago. And off the back of that, I think we categorically proven that, that was a very, very strong deal, and that's allowed us, as Nick said, to continue our profitability and margin expansion. And we see data going exactly the same way. We're deload with it, and I'm really excited about the future.

[Operator]

Your next question comes from the line of Ryan Sigdahl of Craig-Hallum.

[Ryan Sigdahl, analyst]

Maybe just a direct follow-up to Bernie, that last question. But with the new data rights contract with Data Football Co, do you expect to get operating leverage on data rights as a percent of revenue next year?

[Nicholas Taylor, executive]

I guess the first one, just to remind everybody is, any new data rights deal that we're currently in exclusive relationship impacts the second half of 2025. The current deal obviously runs to 2025. But to some extent, Ryan, I'm going to slightly repeat myself on what I said to Bernie is that the 3 key things that I'm concentrating on and we as a business financially concentrating on is double-digit revenue growth, continued margin expansion and cash profitability increases. And as you know, we've had some some success in that over the last couple of years, and we continue to expect all of those 3 to continue to expand through '25, '26 and beyond.

[Mark Locke, executive]

Also, I think just to add to that as well, winning data count on a long-term basis. From a commercial point of view, it's a really strong position for us to be in. We've got the 2 largest sports in the world in our stable. And that gives us a really good basis for long-term partnership conversations with our clients and really puts us in a leading position there.

[Ryan Sigdahl, analyst]

Just for my follow-up, second spectrum, a lot of great products and innovation coming in partnership with leagues, NFL, EPL and so on. You had an exploratory partnership with Bet365. So switching to the operator side. But any update there and the potential to really accelerate second spectrum and some unique stuff you can do more so from an operator customer standpoint?

[Nicholas Taylor, executive]

Yes, the operator side of this is a big part of our focus at the moment. We're spending an awful lot of time and investment on that vision. That's really proven. It's delivered results that were ahead of I guess, what we anticipated this year. I think I've said that before in one of these calls. So we're putting a lot of focus on that. And I think the proof point of that vision has been made. So our job now is just to focus on execution, focus on delivering an additional product and rolling this out to the bookmaker community on a wider basis.

[Operator]

Your next question comes from the line of Robin Farley with UBS.

[Robin Farley, analyst]

Going back to ask about the Football DataCo agreement and maybe asking a slightly different way than the previous questions. When we think about the increase in revenue in the U.K., I generally expect it to be at a much lower rate of growth than U.S. revenues. So should we think about the increase in EPL sports rights expense, which I realize has not been finalized yet, but that you would not be expecting to pay more of an increase in sports rights expense not faster than the revenue growth that you expect in the U.K. Is that reasonable to conclude from your commentary about margin expansion that the sports cost rights wouldn't be increasing more than your expectation of what U.K. betting revenues will be growing at?

[Nicholas Taylor, executive]

Let me start on that and then I'll hand over to Mark to give you a bit more color. I think I understand the question. You must remember, U.K. soccer right is the largest betting sport in the world and is not a U.K.-centric betting right. It is a global betting right. A great example for that. Of course, as you know, is LATAM is opening up. And the latest numbers that are coming out of Brazil, where we'll be earning revenues this year, the back half of the year was significant, and U.K. soccer will be a major attraction and a major marquee event for that part of the world as well as many other parts of the world, not just U.K. So I think that's perhaps the bit that's missing in your hypothesis.

[Robin Farley, analyst]

And maybe to phrase it more specifically that your sports rate expense would not grow faster than you expect revenue growth from those rights, whether it's the U.K. or I should be more clear that obviously, you would get revenue from it in other countries, but that your increase in sports rights would not be greater than that revenue increase globally. Is that a reasonable expectation?

[Nicholas Taylor, executive]

Yes. First of all, just to be clear, is obviously, we don't go to market with just 1/3 of rights. As you know, we package those rights up and U.K. soccer in the same way NFL was no different to anything else. And I don't envisage that changing over the course of the extended contract out to 2029 or U.K. soccer. What I'd say is a little bit what I said to really to Ryan and Bernie is that we've expanded our margins through '22, '23 and '24. Indeed, our guidance that we just iterate our guidance and move our margins from 15.6% to 16.4% in this year. And I'm fully expecting that margin to continue to increase in 25% and increase again in '26 and beyond. So to that extent, then therefore, I'm expecting any new rights deals for SDC to be more than covered and that shouldn't stop us continuing to have a strengthening EBITDA margin across the life of the FTC contract.

[Robin Farley, analyst]

And then just one quick follow-up. Can you give us a change in play as a percent of total?

[Nicholas Taylor, executive]

No, in terms of in-play, I specifically can give you NFL in play. If you look at it on a year-on-year basis, NFL-leGTR was up 140% year-on-year. And if I look at the mix, which I think is probably you're asking for is the NFL in-play mix, GGR was 22%.

[Operator]

Your next question comes from the line of Ben Miller with Goldman Sachs.

[Benjamin Miller, analyst]

With the Football DataCo negotiations ongoing, I'm curious how you think more broadly about the data rights portfolio today and any other holes that you'd like to fill. And at an industry level, how you see consolidation of data rights playing out over time, whether that's through organic wins or through inorganic consolidation.

[Mark Locke, executive]

Yes, in short, we've got everything we need. And if anything, the number of rights that we feel like we need to own and have on a long-term basis, actually decreasing, not increasing. The more we distribute our technology, the more that we roll out the products or second spectrum into other sports and the position that we've got through the relationship we have with the NFL and with DataCo means that actually we feel the opposite effect that you've seen over the previous years in terms of the number of rigs that we want to be going after. We're feeling we feel in a really, really strong position on this stuff.

[Benjamin Miller, analyst]

And just as a follow-up on BetVision. I'm curious in terms of like how you're prioritizing that, is it more to grow the number of sports books that are adopting that product or do you see the larger opportunity of expanding to additional sports that utilize the BetVision product?

[Mark Locke, executive]

The answer is both. We are increasingly focused on rolling new sportsbooks with the BetVision products. And if you watch the space, you'll see news over the coming months on that. But at the same time, it can't just be a one trick only. And therefore, what we're actively doing is adding additional content to BetVision, additional products. We've got to get it right. So we're being cautious about our execution. But again, that's a big focus of the business.

[Operator]

Your next question comes from the line of David Bain with B. Riley.

[David Bain, analyst]

Just had one question. And I'm not sure if I missed this, but a nice beat and wake of what I believe was low 1Q OSB hold for the industry. I'm wondering if you can quantify the impact of the quarter from that.

[Mark Locke, executive]

You're right. Obviously, we hear the same call through the quarterly results that you'd be listening to. And I think somebody used the world underwhelming, I think, on a previous call. And you're right that clearly does impact us because, as you know, we take a position of gaming revenue. Having said that, and I've said this many times, the great thing about Genius is the different levers of growth that we have in this business. Obviously, operating wind larger is one. But as you know, in-play mix, TAM, not just in the U.S. but outside the U.S., just name check Brazil in one of the previous questions as well as media, which has allowed us to over-deliver on guidance for this quarter. So yes, operating win margins is helpful for us, but we've got a number of different levers that allow us to outperform on our guidance that we give.

[Operator]

Your next question comes from the line of Clark Lampen with BTIG.

[William Lampen, analyst]

I have one on the media business. And I guess specifically as it relates to the outlook, a lot of the momentum that, Mark, you talked about earlier in your prepared remarks, seems to be showing up, I guess, from a number standpoint in that business. Could you help us understand, I guess, maybe what you dontribute that to? And how much this is idiosyncratic rather than systematic? And for my second question, could you just remind us on renegotiations. It sounds like that's obviously not a focus right now. But remind us, based on the past cycles, when exactly we could expect you to start to engage with your partners in earnest to nail down a contract? Is that late 3Q or in conjunction with the football season? And does that mean with step-ups that eventually come that most of that will be realized in 4Q or is it later down the road?

[Nicholas Taylor, executive]

I'll start and then I'll perhaps hand over to Mark on that second part of the question. We're absolutely delighted a reacceleration of 63% growth in the media business year-on-year. There's a number of things really that have driven that. I think we've seen some really good strong spend in Florida, for example. We've seen some great spend in places like launches of North Carolina, particularly in March Madness. As you know, there's a lot of cold sport based in that state. And also, if you remember, when we talked in December, we said that there was some timing of spend that was moved from the Christmas holiday season through into January and things like the Super Bowl playoffs. So very strong and definitely sustainable. Now I agree that I think probably 63% is running a bit hot in terms of year-on-year growth. But if you look at the increase in guide, that's still guiding us to a north of 30% year-on-year on a media space. And really, as I've said in previously, the increased margin, the increased double-digit revenue growth, the increased cash generation through '25 and '26 that we've been talking about. Clearly, Media will continue to pay a significant part of that.

[Mark Locke, executive]

There's another also softer point on the media side is the growth that we're getting and the revenue delivery that you're seeing is really from the, what I call, the existing media business only. It's from the business that you guys are all aware of and you're seeing it won't have escaped to you, and I think we talked about it before that we've been putting money into different areas in the media space. We've been building new products, one of which is literally in launch phase at the moment, which I think it's fair to say we've got pretty good about that because that product is delivering really well. But again, that won't be showing up until H2 of this year in the revenue lines. And the other thing that's starting to look really quite promising and coming through really well, which, again, is also not in our view, is in the view that we've given is some of the additional client split that we're getting. So historically, this business has been all about really Sportsbook revenue. And I've mentioned a number of times in these calls that we're looking at bringing in different additional brands outside Sportsbooks and driving media revenue growth from that. And that's something that we're really starting to see come through more aggressively in the numbers, the split between sportsbook and nonsports book is looking quite attractive. So we feel like we're in a strong place on the media side, and we're excited about not only the new products but also the new clients that we've started to bring on board. Just on the renegotiations. Look, there's not a drop-dead date where we suddenly start conversations. And our job is to be a good partner to support and to continually to have those relationships and have those conversations. So we're always talking to our partners. And that's not really, really changed. Clearly, there are dates around new seasons of sport, which you've correctly identified, which will definitely feed into the numbers at some point. But again, at the moment, we're not putting too much weight on that in any of the forecasts that we've released to the market.

[Operator]

Your next question comes from the line of Jordan Bender with Citizens JMP Securities.

[Jordan Bender, analyst]

We have a lot of good data in terms of the performance in the U.S. sports betting market, but the one missing piece we don't really have is Hard Rock in Florida. So maybe without getting into the financials of that, can you just talk about how you've helped them build that business? And does the improvement in guidance in the back half of the year? Or does this state of Florida have any play within that?

[Nicholas Taylor, executive]

Look, Florida and hard work is a great example of the underlying success of the business model of juniors. Hard Rock just become a bigger customer of Genius is if they continue to have the do they have in that Floridian market. I obviously can't go into the specific details, but everything we're doing for driving or funnel or Caesars is exactly what we're doing for Hard Rock as well within the Florida market, the events that we're providing. Obviously, there's a lot of sports betting, there's a lot of professional teams based in Florida. And right now, I think I called out one of the questions on media. There's also been a significant amount of media spend in Florida, particularly through social media over the first quarter as Hard Rock solidify their position.

[Jordan Bender, analyst]

And then on the follow-up, now the debt could be in the picture here. Where could you be comfortable taking leverage up to for the sake of growth.

[Nicholas Taylor, executive]

I think Mark touched on this early on. This is just another building block in our maturing as a business. Nothing changes in terms of our asset and what we want to do. It just gives us firepower to be able to be opportunistic. We've actually filed the exhibit today. So everyone can go and have a look, it's pretty straightforward. It's $90 million as it stands and as I say, to be used as opportune as and when any circumstances ciltake.

[Operator]

Your next question comes from the line of Chad Beynon with Macquarie.

[Chad Beynon, analyst]

I wanted to drill into the in-play mix a little bit more. So you said 22% was the number. Are you still seeing growth in older vintage states in terms of betting behaviors. I'm not sure if you have that detailed data at your fingertips and states like North Carolina and some of the newer ones in '23, are you just seeing a higher starting point with in play? I think we're all just trying to figure out what the ceiling is in the U.S.

[Mark Locke, executive]

Let me give you a color. First of all, there's a couple of questions in there. The first one around more mature states, yes, we continue to see significant growth in the States. They're publicly available. You can see New Jersey, I think it's the first state wasn't it that legalized in any meaningful way, and that continues to grow significantly. I think if you look at things like Kansas that grow, I think, doubled year-on-year in its second year to its first year. So yes, absolutely, we continue to see can grow. We also continue to see customer behavior, I guess, become more sophisticated, which inevitably drives in-play sports betting. We're seeing that on a state-by-state basis as well. As you know, product enhancement is the third leg of that in terms of growing, and we gained some very early statistics of BetVision, which is just our example, but a really good example of product evolution in this spec. And we'll continue to see that Mark touched nearly about how that vision is going to become more ubiquitous over the course of the following years. So in terms of where does this go in terms of U.S. market, we've consistently said in mature markets in place sports betting is anywhere around that 60% to 70% level of in-place sports betting. And we are absolutely confident to ensure that we anticipate the U.S. will ultimately end up in that position as well.

[Chad Beynon, analyst]

And then on Brazil, you've touched on this a couple of times. I believe you've said that it is factored into the back half of the '24 guidance. Any details in terms of when the market is expected to launch and how meaningful this could be in the back half?

[Mark Locke, executive]

Yes. We have a very small amount in truth. It's not a material amount for 2024, so it's not going to change the dial there. The latest we have is that their licenses are being awarded in the second half of this year, probably in the fall with expected betting to be legalized and to be actually using revenues in really sort of back end of Q3, Q4 for Brazil. As you know, there's an NFL game happening in Sao Paulo in September to help drive the in-place sports betting, and we understand that there are significant number of licenses that are going to be awarded. But in terms of TAM, some of the numbers on an annualized basis are really quite significant coming out of Brazil, certainly several billion dollars worth of time we're anticipating. I wouldn't get carried away for that for 24, but that's certainly something that's a really significant opportunity 25/26 and beyond.

[Operator]

Your next question comes from the line of Eric Martinuzzi with Lake Street.

[Eric Martinuzzi, analyst]

I wanted to go and revisit the media strength that you had, just from a modeling perspective, looking out to 2025, do you view this as a new seasonality around the Sportsbooks emphasizing that Super Bowl January, February, the March ban is just something we should consider as the new normal? Or there was more of a macro issue with customer acquisition, a one-off, so to speak?

[Mark Locke, executive]

Yes, Eric. Q1 and Q4 have been traditionally our strongest meter segments, really following the U.S. sporting calendar, I think that's going to be the case for 2024. Look, as I said earlier, we're delighted with the 63% year-on-year increase. I think that's probably a little bit hot to be sustainable, but we're still forecasting given the uptick in guidance that we've just given in this call, we're expecting a major growth annually for the year to be north of 30%. So we're certainly seeing a reacceleration of that business. As I say, on an ongoing basis, we're not giving guidance yet for 2025. But on a number of questions we've talked about it in terms of the shape of 2025 and how we're expecting the tailwinds that we're seeing in '24 to continue through '25 and '26. And that should drive those 3 key financial metrics that we talked about, which is the double-digit revenue growth, the expense in EBITDA margin and the continued cash increase, medial pay are not insignificant part of that.

[Operator]

Your next question comes from the line of Brett Knoblauch.

[Brett Knoblauch, analyst]

On the guidance revision, could you maybe parse out the growth that you're expecting between or was the revision mainly due to the Media segment outperforming? Or was it also some greater confidence on the bedding technology segment as well?

[Mark Locke, executive]

Look, first of all, strength right across the whole business, we've got real confidence in what 2024 is looking like. In terms of the specific numbers, the majority of it is media based on, obviously, the Q1 media performance and therefore, the confidence we have, particularly in Q3 and Q4, following on from next question in terms of media position. That's the makeup of the 2024 revised guide.

[Brett Knoblauch, analyst]

And then on the flow-through of margins, could you just, I guess, remind us again, I guess, the incremental margins of the Bedding Technology segment versus that of the Media Technology segment?

[Mark Locke, executive]

It sounds like a very simple question, but a lot of different layers of nuances. The headlines really are is that for every extra dollar that we earn in betting, whether that's because your operating margin go up or TAM increases or in-place sports better mix, the extra dollar, the majority of that drops through, so it's close to 100%. Now obviously, individual betting products will vary on that basis, but that's the broad headlines.

[Brett Knoblauch, analyst]

And then maybe just one last. I guess U.S. Forest and GGR growth has decelerated over the past few quarters. I guess what is included into your guide for the full year or what are you baking in? And on that, what percent of the U.S. is the sports betting business now?

[Mark Locke, executive]

Sorry, it was the first question, Brett, do you say in terms of what we're banking in, in terms of the rest of the year as a relation to GGR?

[Brett Knoblauch, analyst]

Yes.

[Mark Locke, executive]

We don't give that kind of level of detail. And what I'd say is, I've said it before, of course, in terms of our guidance philosophy is that we're around about a kind of 4 out of 10 are conservatism, i.e., one being very conservative and tend to be very aggressive. So we're not anticipating any significant upturn in terms of things like in-play mix, GGR growth or TAM growth, certainly outside of the more conservative forecast that are out into the market. So we're pretty confident of where we sit here today.

[Operator]

Your next question comes from the line of Clark Lempen of BTIG.

[William Lampen, analyst]

I wanted to come back to this point around like financial flexibility. And I understand that with the balance sheet capacity and your free cash flow momentum picking up, the priority would obviously be to acquire as many really high ROI businesses or take advantage of high ROI M&A where possible. But if that doesn't present itself and the universe for whatever reason is not as large or as available, I guess, as you might like. How should we think about your propensity to lean into buyback, especially because we have this sort of increasing cash flow momentum over the balance of the year and into next year?

[Mark Locke, executive]

I mentioned this before, but just on the M&A. The 2 main reasons we won fares, as I said before, is is potential M&A and obviously, buyback. So on the M&A, there's an extremely high bar for M&A for us. I've said it a lot of times. I'll say it again. We've got all of the technology that we really need. And we're very happy with the level of investment that the business is making in the way that we operate. So in terms of M&A, they've got to be businesses that are accretive that really drive a lot of value for our shareholders. In terms of buybacks, again, this is going to be assessed over the coming time. We feel really good about the business as a positive momentum. We're seeing a lot of that come through in our numbers, getting great technology distribution, really good delivery. We've got new products in the pipeline. The business is live. So from my point of view, the opportunities are quite vast and we'll assess the buyback as appropriate.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.